EXHIBIT 10(t)
January 16, 2001
Mr. George H. Glatfelter II
Chairman, President and Chief Executive Officer
P. H. Glatfelter Company
96 South George St
Suite 500
York, PA 17401
Dear George:
We appreciate the opportunity to assist the P. H. Glatfelter Company ("P. H.
Glatfelter") with the execution of the detailed design and implementation
phases of its Project IMPACT ("IMPACT"). This letter ("Arrangement Letter")
with an effective date of October 3, 2000 documents the parties mutual
understanding as to how Accenture LLP ("Accenture"), formerly known as Andersen
Consulting, with an office located at 161 N. Clark Street, Chicago, IL 60601,
will assist P. H. Glatfelter with the Project as further described below (the
"Project"). The Project Workplan, to be mutually amended in writing by the
parties from time to time (the "Workplan") is attached hereto as Exhibit 1 and
is incorporated into this Arrangement Letter by this reference.
Please note that on January 1, 2001, Andersen Consulting's name changed to
Accenture With this name change, all provisions in this Arrangement Letter will
remain in full force and effect.
BACKGROUND
During the planning phase of IMPACT, Accenture supported the P. H. Glatfelter
Project team in its recommendation of an information technology solution
together with changes in business organization and processes to help support
the realization of P. H. Glatfelter's vision. As a result of these
recommendations, Accenture has been contracted to aid in the detailed design
and implementation of the technology solution, organization and process changes.
2. PROJECT OBJECTIVES
P. H. Glatfelter's Project objectives are as follows:
- - Design and implement an organization below the Vice President level that
aligns the new processes with the vision and strategy
- - Develop the detailed processes and organization designs required to
implement the New Product Development business process
- - Prototype components of the Finance, Requisition-to-Payment, and
Order-to-Cash processes with the Enterprise Resource Planning (ERP)
Application of choice using an Accenture -solution center
- - Develop and implement the business processes, change management, and
technology architecture designs to support the implementation of an ERP
solution for the business processes of Finance, Requisition-to-Payment,
and Order-to-Cash
- - Implement a customer-direct web site for the book publishing business of
P. H. Glatfelter and implement an ongoing approach for hosting the site
(likely using 3rd party hosting services to be determined by P. H.
Glatfelter )
3. PROJECT SCOPE
3.1 ORGANIZATION DESIGN
Building on the work previously completed by Accenture, the scope of this
effort will provide a detailed organization design below the Vice President
level and a transition plan for the new organization. This effort will focus on
the Corporate Headquarters, Spring Grove, Ecusta, Neenah, Gernsbach, and P.D.C.
locations. P. H. Glatfelter will assume responsibility for assigning
individuals to their new jobs.
Specifically excluded from the scope of organizational design are Compensation
Design and Compilation, Recruiting, and Career Development References to a
detailed scope document entitled 'Organization Design Scope', to be mutually
amended in writing by the parties from time to time is incorporated herein by
this reference.
3.2 SALES AND OPERATIONS PLANNING PROCESS REENGINEERING (S&OP)
This step will focus on the Sales and Operations Planning process. The effort
will establish enhanced processes, create new, Microsoft Excel based tool
(decision support management report), performance measurement tracking and an
implementation plan. This effort will also coordinate with the organizational
design step.
Excluded from the scope will be any automated tool support for planning and
scheduling beyond the use of the spreadsheet decision tool.
References to a detailed scope document, 'Sales and Operations Planning Scope',
to be mutually amended in writing by the parties from time to time is
incorporated herein by reference.
3.3 ERP PROTOTYPE (JUMPSTART)
This step will yield a prototype of a subset of the Finance, Order to Cash and
Requisition to Payment business processes, using representative P. H.
Glatfelter data. The prototype will be used as an input to the ERP detailed
design work and will not be a production ready tool.
References to a detailed scope document, 'ERP Jumpstart Scope', to be mutually
amended in writing by the parties from time to time is incorporated herein by
reference.
The jumpstart technical environment for the ERP software will be hosted out of
the Accenture data center in Cincinnati.
3.4 ERP IMPLEMENTATION
The scope for this phase will consist of the following (to be detailed in a
separate document entitled, 'ERP Implementation Scope', to be mutually amended
in writing by the parties from time to time and is incorporated by reference
herein):
3.4.1 Business processes:
- - Requisition to Payment
- Manage Master Data
- Manage Supply Sourcing
- Manage Purchasing
- Manage Raw Materials
- Manage Accounts Payable
- - Finance
- Manage General Ledger
- Manage Assets
- Close
- Manage and Report Costs
- Manage and Report Finance
- - Order to Cash
- Plan Sales & Operations
- Manage Sales Orders
- Manage Finished Goods Inventory
- Manage Accounts Receivable
3.4.2 PROGRAMMED ELEMENTS:
It is assumed that a number of reports, interfaces, conversions, extensions and
forms will be designed and implemented during this phase. The quantities of
these programmed elements can be found in the table below:
- ----------------------------------------------------
ERP Global Estimating Model Estimate Number
- ----------------------------------------------------
Number of Reports 20
- ----------------------------------------------------
Number of Interfaces - ERP to Non-ERP 30
- ----------------------------------------------------
Number of Interfaces - Non-ERP to ERP 28
- ----------------------------------------------------
Number of Conversions 70
- ----------------------------------------------------
Number of EDI Interfaces 8
- ----------------------------------------------------
Number of Forms 25
- ----------------------------------------------------
- ----------------------------------------------------
Total 550
- ----------------------------------------------------
The development environment will continue to be hosted within the Accenture
data center in Cincinnati for a period of 9 months.
3.5 CUSTOMER DIRECT WEB-SITE
A web site will be developed, which allows P. H. Glatfelter's customers to
transact business directly with P. H. Glatfelter. This web site will use a
channel management application from Click Commerce and will initially be
interfaced with existing systems within P. H. Glatfelter; once the Order to
Cash process is automated using ERP, then the web site will be interfaced with
the ERP application. The web site will be hosted by a 3rd party to be
determined and contracted by P. H. Glatfelter. It will support the book
publishing business within the Glatfelter division only.
Based on prior discussions with P. H. Glatfelter team members, the Project has
been broken down into three separate phases. The scope of these phases are
detailed in a separate scope document which is incorporated herein by reference.
3.6 GENERAL SCOPE CONSIDERATIONS
3.6.1 Locations
P. H. Glatfelter operating locations included in the scope of the Project are
as follows:
- - Corporate Headquarters in York, PA
- - Spring Grove, PA Mill
- - Ecusta, NC Mill
- - Neenah, WI Mill
- - Gernsbach, Germany
- - Papiers de Cascadec, France
Excluded from the scope of the Project is the P. H. Glatfelter Timberlands
(other than the integration of raw material purchasing ).
3.6.2 Processes
Excluded from scope are the following processes:
- - Payroll / Human Resources
- - eProcurement
- - Advanced Planning and Scheduling (APS)
- - Customer Relationship Management (CRM)
- - Manufacturing Execution System (MES) other than for order entry as required
- - Data Warehousing
- - T&E (travel and entertainment)
- - Time & Attendance
3.7 PROJECT SCOPE CONTROL PROCESS
We recognize that scope management is a critical success factor of this
Project. The following process will be followed to manage any scope request
changes.
- - Request for change is made to the Program Management team
- - Program Management reviews the request for change and discusses with the
appropriate teams involved during a weekly scope review meeting.
- - Teams review request, assess impact to scope, cost, and timeline.
- - If such change is approved by both parties, it will be documented in writing
and signed by both parties, thereby modifying the relevant scope document.
4. PROJECT APPROACH
4.1 ORGANIZATION DESIGN
Deliverable creation will follow a phased approach that incorporates interim
workshops and decision points where the P. H. Glatfelter Steering Committee is
actively involved in evaluating progress, sanctioning subsequent activities and
redirecting resources in an attempt to achieve our mutually agreed upon
objectives. The phases of the organization design are as follows:
- - Process Refinement
- - Role, Function, and Structure Development
- - Detailed Organization Development
- - Transition Plan
4.2 SALES AND OPERATIONS PLANNING
The decision support management report (Microsoft Excel spreadsheet) will
provide an integrated link between Sales and Marketing, and Manufacturing.
Creation of the decision support management report will follow an iterative
approach that incorporates interim releases of this report. The S&OP sponsor
team (COO, CFO, VP Supply Chain Management, VP Marketing and Sales, ) is
actively involved in evaluating progress, sanctioning subsequent activities and
redirecting resources in an attempt to achieve the mutually agreed upon
objectives. For each iteration, the following activities will take place:
- Define content requirements
- Data collection
- Build and/or enhance features in the S&OP decision support
management reports
Concurrent with the development of S&OP decision support management reports,
the S&OP team will work closely with P. H. Glatfelter personnel at various
levels to set up the processes for report generation, and report review
meetings.
4.3 ERP PROTOTYPE (JUMPSTART)
The ERP prototype will be executed primarily out of an Accenture solution
center using Accenture development resources. Requirements will initially be
gathered from key users (to be determined by P. H. Glatfelter) through
workshops. Progress on construction of the prototype will be reviewed with the
users at least once every two weeks. Development will be iterative based on the
feedback from these review sessions. P. H. Glatfelter staff will be able to
access the jumpstart system directly from the corporate offices in York (PA).
Once completed, the prototype may be used as a basis for detailed ERP design,
and as a communication vehicle within P. H. Glatfelter.
4.4 ERP IMPLEMENTATION
The overall approach will be accomplished in several segments of work, all of
which will be documented within a common tool set (the 'Method Delivery
Manager', ("MDM"), to be provided by Accenture to P. H. Glatfelter).
- - Global Design - representatives from each P. H. Glatfelter division
will work together in York (PA) to make ERP design decisions which are
common to each division and geography. The design will be translated into
ERP configuration where the ERP application can directly support the
design. In the case that ERP cannot directly support the design
programming specifications will be written (e.g. interfaces, forms,
reports). This design phase will be run on a workshop basis and it is
anticipated that much of the ERP configuration will be done remotely at
an Accenture solution center.
- - Region-Specific Design - this will incorporate those elements of the
design which are not common across the divisions and / or regions. It is
anticipated that this work may happen in both the US and Europe.
- - Development and Programming - all development for reports, interfaces,
conversions, extensions and forms will follow a very structured path
including functional and technical specifications, programming, unit and
acceptance testing.
- - System Testing - a four pass approach to system testing will be
undertaken. The first pass will consist of the configuration done within
the ERP application. The second and third passes will consist of the
programmed elements. The final pass will constitute a user acceptance
test to be signed off by key users.
- - Training - the approach to training will primarily be 'train the
trainer'. Training materials will be specified and developed throughout
the Project and initial classes will focus on business users from within
P. H. Glatfelter who will then in turn train others within the business.
The training materials will include classroom based aids, together with
on-line exercises.
- - Data Conversion - a 3rd party consultancy will be retained by P. H.
Glatfelter to manage and facilitate much of the data cleanup,
reconciliation and conversion tasks associated with materials, vendors
and customers. They will work directly with users to get the existing
legacy data to a stage where it can be transferred automatically into the
ERP application using conversion programs developed in the programming
phase. Conversion itself will be a multi-pass approach where business
users review the data after each pass in a temporary environment to
ensure that final production data is of the appropriate quality.
- - Rollout - will be mill by mill in a sequence to be agreed upon by both
parties.
4.5 CUSTOMER DIRECT WEB SITE
The following six key work streams make up the approach necessary to implement
the Customer Direct Web site.
- - Project kickoff. Conduct business interviews and technical interviews.
Design the customer direct web site.
- - Build and Unit Test. Sign off on the design.
- - Complete assembly and staging test.
- - Complete & sign off acceptance test. Go live with customer direct web
site.
- - Post "go live" support.
P. H. Glatfelter acknowledges that production support activities will be
required after the software release. Seven months of production support for
customer direct website by Accenture are included in this Arrangement Letter.
The parties currently contemplate that these production support activities will
consist of addressing production data issues, supporting users, supporting
training activities, developing minor enhancements to the application, applying
vendor software updates, and performance tuning the application, database,
server operating systems, and network. Accenture will work with P. H.
Glatfelter to develop a mutually agreeable approach and plan for supporting the
application after launch.
4.6 GENERAL APPROACH CONSIDERATIONS
A Program Management team will manage the projects using issue management,
scope management, status reporting and resource management processes with a
consistent set of tools.
5. PROJECT TIMING
5.1 ORGANIZATION DESIGN
The duration of this step will be approximately 4 months and will end with an
implementation of the deliverables developed during that period currently
estimated to be implemented by January 31st 2001.
5.2 S&OP
The duration of this step will be approximately 4 months and will end with an
implementation of the deliverables developed during that period, curently
estimated to be implemented by January 31st 2001.
5.3 ERP PROTOTYPE
The duration of this step will be approximately 4 months and will end with an
implementation of the deliverables developed during that period, currently
estimated to be implemented by January 31st 2001.
5.4 ERP IMPLEMENTATION
Global design will commence in February 2001, following the January 15th
milestone. It is anticipated that the rollouts will be completed by September
30th, 2002.
5.5 CUSTOMER DIRECT WEB SITE
Work is scheduled to complete by August 2001 for the version of the web site
which is interfaced to the legacy systems; the final version will coincide with
the ERP rollouts for the Glatfelter division.
5.6 PROJECT TIMING - GENERAL
The Program Management team will meet with the P. H. Glatfelter Steering
Committee during the course of this Project as outlined in the Workplan to
review:
- - Progress towards milestones
- - Resource needs for the next stage
- - Scope changes
- - Business condition changes which would impact the Project
- - Key milestones as listed below
- January 15, 2001 Organization Design /ERP Readiness Review
- June 15, 2001 ERP Build Readiness Review
- November 16, 2001 First Mill Rollout Readiness Reviews
- January 18, 2002 Second Mill Rollout Readiness Review
- May 17, 2002 Third Mill Rollout Review
- July 12, 2002 Fourth Mill Rollout Readiness Review
Upon completion of each of these milestones P. H. Glatfelter will approve and
sign-off the completion of the Project to date. The Workplan describes
activities related to the delivery of these milestones.
6. PROJECT DELIVERABLES
6.1 ORGANIZATION DESIGN
The activities will yield the following deliverables that will align the
organization around the business processes required to realize P. H.
Glatfelter's vision:
- Detailed organization structure below the Vice President level
- Roles and responsibilities
- Governance guidelines
- Job Descriptions
- Key Performance Indicators to align the structure
- Organization Chart
- Transition plan to the new organization
- Training Gap Analysis
- Training Plan
- Recruiting Plan
- Implementation Plan
- Communication Plan
In building these deliverables, Accenture is responsible for creating and
facilitating workshops, defining approach, methodology and templates and
providing management of consulting resources.
P. H. Glatfelter is responsible for approving the interim and final
deliverables, participating in workshops, providing business content,
presenting results to the steering committee. Furthermore, it is responsible
for compensation design and compilation, recruiting, career development and
assigning individuals to positions in the new organization.
6.2 SALES AND OPERATIONS PLANNING
- The following deliverables will result from the implementation of the
Sales & Operations Planning process: Detailed process flow diagrams
with activities and responsibilities
- Decision support management reports (Microsoft Excel Spreadsheet)
for the 30, 60, and 90 day plan
- Data interface from legacy systems
- Identification of organizational impact resulting from process
changes and incorporation into the organization design project
- Key Performance Indicators for process measurement and continuous
improvement
- Implementation Plan
In building these deliverables, Accenture is responsible for creating and
facilitating workshops, defining approach, methodology and templates, building
the decision support management tool and providing management of consulting
resources.
P. H. Glatfelter is responsible for the data interface from legacy systems,
participating in workshops, providing business content, approving the interim
and final deliverables and presenting results to the steering committee.
Accenture and P. H. Glatfelter will be jointly responsible for the creation of
all other deliverables.
6.3 ERP PROTOTYPE
The following deliverables will result from the implementation of the ERP
prototype:
- Draft of ERP Organizational Elements
- Draft of Master Data Key Mapping
- Prototype of ERP core business transactions within Finance, Order
to Cash, Requisition to Pay with supporting configuration and
business process documentation
- Recommendation on level of support for order entry and
manufacturing within ERP (i.e. define the interface point with the
MES)
In building these deliverables, Accenture is responsible for creating and
facilitating workshops, defining approach, methodology and templates, drafting
the ERP organization elements and master data key mapping, building the SAP
prototype and providing management of consulting resources. Furthermore,
Accenture will be responsible for hosting the ERP technical environment from
its Cincinnati data center.
P. H. Glatfelter is responsible for participating in workshops, providing
business content, approving the interim and final deliverables and presenting
results to the steering committee.
Accenture and P. H. Glatfelter will be jointly responsible for the
recommendation on the order entry decision, together with ensuring connectivity
between Accenture and P. H. Glatfelter offices.
6.4 ERP IMPLEMENTATION
The following deliverables will result from the ERP implementation:
- -----------------------------------------------------------------------------------------------------------
AC Responsibility PHG Responsibility
- -----------------------------------------------------------------------------------------------------------
Detailed workplan and methodology Primary Secondary
- -----------------------------------------------------------------------------------------------------------
Business process documentation Secondary Primary
- -----------------------------------------------------------------------------------------------------------
ERP configuration rationales Primary Secondary
- -----------------------------------------------------------------------------------------------------------
Functional design specifications Primary (ERP) Primary (Legacy)
- -----------------------------------------------------------------------------------------------------------
Technical design specifications Primary (ERP) Primary (Legacy)
- -----------------------------------------------------------------------------------------------------------
Code for reports, interfaces, conversions, enhancements, and forms Primary (ERP) Primary (Legacy)
- -----------------------------------------------------------------------------------------------------------
Test plan and testing supporting documentation Secondary Primary
- -----------------------------------------------------------------------------------------------------------
Data cleansing and conversion Secondary Primary
- -----------------------------------------------------------------------------------------------------------
Training plan and end user training materials Primary Secondary
- -----------------------------------------------------------------------------------------------------------
Communication plan and communication materials Secondary Primary
- -----------------------------------------------------------------------------------------------------------
Final ERP configured solution Primary Secondary
- -----------------------------------------------------------------------------------------------------------
Generally, in building these deliverables, Accenture is responsible for
creating and facilitating workshops, defining approach, methodology and
templates, providing the MDM documentation tool and providing management of
consulting resources.
Also, P. H. Glatfelter is responsible for participating in workshops, providing
business content, approving the interim and final deliverables and presenting
results to the steering committee.
Note that the parties agree that any ABAP development which requires the
participation of SAP America, Inc. ("SAP") resources will be jointly agreed to
in writing by the parties prior to SAP resources participating in any such
development work.
6.5 CUSTOMER DIRECT WEB SITE
The following deliverables will result from the Customer Web Site development:
- Functional Design
- Site Map
- Technical Architecture
- Unit Test Plans
- System Test Approach & Scripts
- Web Site
There is a joint responsibility for the creation of the functional design and
system test scripts.
Andersen Consulting has primary responsibility for the creation of all other
deliverables.
P. H. Glatfelter will be responsible for the review and approval of the
deliverables.
6.6 OTHER DELIVERABLES
6.6.1 IT sourcing alternatives
Accenture will provide P. H. Glatfelter executives with IT capability sourcing
alternatives for consideration during appropriate phases of the ERP
implementation and on-going technical support of ERP and related systems. Such
alternatives may include, but will not be limited to, use of solution centers,
strategic alliances, and building local third-party relationships. Alternative
services may include, but are not limited to, implementation, testing, data
conversion, conversion support, post-conversion stabilization support, problem
management, user support, maintenance and development. P.H. Glatfelter will be
solely responsible for the selection and negotiation of all strategic and third
party relationships that it determines are appropriate.
6.6.2 Knowledge transfer
Development of key resources within P. H. Glatfelter is recognized as a success
factor for Project IMPACT. Accenture will, where both parties agree are
appropriate, provide opportunity for key P. H. Glatfelter personnel to learn
new and additional skills relating to business processes and technical
components of the ERP implementation. The P. H. Glatfelter IT Project Manager
will, with input and assistance from the Accenture Program Manager, design,
implement and track a reasonable and acceptable knowledge transfer program. The
Program Management Team will be responsible for measuring the execution of this
program by milestones. It is the sole responsibility of P. H. Glatfelter
personnel in this program to absorb, retain and demonstrate proficiency of
these new and additional skills.
7. PROJECT ASSUMPTIONS
The following assumptions have been used to develop this Arrangement Letter and
should be considered an integral part of this Arrangement Letter. If any of
these assumptions prove to be invalid and Accenture is aware thereof, Accenture
will provide notice to P.H. Glatfelter to correct and both parties will agree
to the impact on the fees, schedule, and staffing prior to continuation of the
Project.
7.1 ERP IMPLEMENTATION
- - P. H. Glatfelter will have established their own on-site internal
technical environment (in Spring Grove, PA) by June 1, 2001 or will have
sourced the technical environment from alternative source. Hardware and
tools acquisition will also be completed by this time. Costs for hardware
/ tools will be the responsibility of P. H. Glatfelter.
- - Data conversion services provider will be selected by P. H. Glatfelter
by January 1st 2001 in order to meet catalog and data conversion
requirements for the next phase. P. H. Glatfelter will cause the third
party to be involved during the design process to insure that conversion
requirements are appropriately addressed.
- - Project team training on the ERP software will be provided by the ERP
vendor and conducted by P. H. Glatfelter. P. H. Glatfelter team members
will attend the appropriate training for their respective roles.
- - Estimated effort for ERP assumes a common global design across all
sites. Specific requirements for each location will be minor and limited
to specific business requirements to local regulations and/or customer
differences.
- - Any changes to the requirements after confirmation will go through the
change control process as noted above. If the implementation of
particular features of the software are not possible due to either
limitations in the base software package, the effort involved to
customize the software, or if implementing the selected features would
jeopardize achieving the overall objectives of the Project, Accenture
will discuss implementation alternatives with P. H. Glatfelter. These
alternatives may include manual process work-arounds, delaying certain
functions
and features of the application until a future software release, or
utilizing other software packages for some functionality.
7.2 CUSTOMER DIRECT WEBSITE
- - P. H. Glatfelter shall be solely responsible for the compliance of the
Click Commerce software and any associated portal activity and internet
service with any applicable laws, rules or regulations relating to such
activity imposed by relevant governmental authorities, including but not
limited to the following topics as they apply to use of the Click
Commerce software and any associated services on the internet: (a) data
privacy (b) trademark and unfair competition laws, (c) advertising , (d)
currency translation, (e) transaction reporting, (f) censorship, (g)
import/export, and (h) taxation.
- - P. H. Glatfelter shall be solely responsible for obtaining all
authorizations and/or licenses necessary from third parties to enable and
support all content, framing and/or linking functions associated with any
eCommerce or portal development and activity associated with the Project.
- - P. H. Glatfelter shall be solely responsible for performing all legal
searches, and for bearing all costs and expenses associated with such
search(es), to ensure that any names, icons, or other symbols used in the
P. H. Glatfelter internet service offering, whether provided by
Accenture, P. H. Glatfelter, or any other party ("Symbols"), do not
infringe upon any copyrights, service marks, trademarks, registered names
or intellectual property rights. P. H. Glatfelter shall be solely
responsible for determining whether or not any such Symbol infringes any
such rights.
- - P. H. Glatfelter has completed the evaluation of Click Commerce
software and has determined that it meets all its requirements.
7.3 GENERAL ASSUMPTIONS
- - The Project will be a joint team effort of Accenture and P. H.
Glatfelter resources (the "Project Team")
- - The Project team will continue to use Accenture's MDM for the
completion of the work. Accenture will provide to the P. H. Glatfelter
team access and usage of the MDM to support the documentation of key
business decisions and for the overall management of the Project.
- - P. H. Glatfelter will provide adequate numbers of licenses of project
management software to facilitate project and budget control reporting.
- - P. H. Glatfelter will continue to provide adequate facilities,
equipment, systems connectivity and work space for all Project personnel.
- - P. H. Glatfelter will identify change agents for each of the operating
facilities and will work with the teams to confirm key process designs
and begin taking ownership of process related activities at the mill.
Process Owners will be identified to facilitate design of processes
across mills / functional units and to work with the Change Agent
Network, Sponsors, Steering Committee and Project team to ensure process
outcomes are defined and realized.
- - P. H. Glatfelter will be responsible for insuring that all P. H.
Glatfelter staffing of personnel is completed consistent with the Project
work plans.
- - P. H. Glatfelter shall have the option of acquiring hardware and
software required for the Project through Accenture's affiliated entity,
Proquire LLC, subject to a separate agreement, as long as the price or
license fee for such third party products is the same as or lower than
the price at which P. H. Glatfelter can obtain such third party hardware
or software. Accenture, as agent for Proquire, may invoice, collect, and
receive from P. H. Glatfelter all sums that are or become due to
Proquire, including taxes and shipping charges, as applicable.
- - If Accenture personnel perform services pursuant to this Arrangement
Letter outside the city, state, province, or country in which such
personnel are based, P. H. Glatfelter shall reimburse Accenture for
increased tax and reasonable compliance costs incurred by Accenture
personnel as a result of providing such services ("Compensatory Taxes").
- - As the Project is a long term Project, the parties recognize that
various aspects of the scope are currently unknown; may need to be
further defined; and may change throughout the course of the Project. The
formal change control process will be followed by the Project Team.
Changes to design decisions and scope will have an impact on resources,
fees and timeline, and will be reviewed and approved in advance according
to the agreed upon process (see Section 3.7).
- - As of the date of this Arrangement Letter, the Project has been
estimated at a total of 11,964 days of Accenture activities, on which the
fees have been estimated.
- - P. H. Glatfelter will negotiate with all third party software
licensors, including but no limited, to Click Commerce and the ERP
vendors, and will be responsible for procuring the required software
licenses, documentation, and support contracts on or before December 4,
2000.
- - P. H. Glatfelter will be responsible for obtaining any consents
necessary for Accenture's access in order to perform its obligations
under this Arrangement Letter. Accenture will work with P. H. Glatfelter
to identify where the consents are required for Accenture to conduct its
work. Accenture will use its best endeavors to fulfill any reasonable
requirements on its part for P. H. Glatfelter to obtain such consent.
- - Accenture is not responsible for delays that are imposed by P. H.
Glatfelter or other entities, including Click Commerce and the ERP vendor
or any other consulting groups or vendors. As these systems are dependent
upon other P. H. Glatfelter applications, appropriate, timely assistance
from the responsible P. H. Glatfelter organizations and third party
groups will be required.
- - P. H. Glatfelter shall be responsible for its operation and use of the
deliverables. P. H. Glatfelter understands and agrees that it will be
responsible for determining whether the services and deliverables
provided by Accenture hereunder, including any revised business processes
implemented pursuant to this Arrangement Letter, (i) meet P. H.
Glatfelter's business requirements, (ii) comply with all federal, state
and local laws, ordinances, codes, regulations and policies applicable to
P. H. Glatfelter, and (iii) comply with P. H. Glatfelter's applicable
internal guidelines, long-term goals and any related third party
agreements.
- - P. H. Glatfelter shall provide Accenture with access to client
personnel and facilities sufficient for Accenture to fulfill its
obligations hereunder. Accenture will provide P. H. Glatfelter with prior
notice of problems that it is encountering related to access to client
personnel and facilities.
- - To assist the Project team, background information will need to be made
available by P. H. Glatfelter for discussions with people in key areas.
This material would include: organization/staffing, standards, procedure
and process documentation (i.e., change management, problem management,
fault management), operations architecture, application profiles, web
hosting service descriptions, operations management products,
service/operational level agreements, etc. Any information requested by
Accenture and not available to the Project Team or inaccurately provided
to the Project Team may result in additional costs, delays, or
limitations in functionality.
- - Accenture will provide a software selection process to support P. H.
Glatfelter's selection of the software. P. H. Glatfelter will be solely
responsible for selecting all Project software vendors.
- - P. H. Glatfelter is solely responsible for the adoption, successful
operation and appropriate staffing for these software selection
processes, which will need to be in place and fully operational prior to
the first ERP conversion date as specified in the workplan.
8. TESTING AND ACCEPTANCE OF DELIVERABLES
8.1 DELIVERABLES ASSOCIATED WITH SYSTEM DEVELOPMENT
Accenture will provide example test plans and criteria from previous projects
of similar complexity; P. H. Glatfelter will provide Company-specific data and
test scenarios. From these, the parties agree to develop mutually agreeable
test procedures consisting of multiple passes. Each pass is designed to
progressively designate and fix high, medium and low level errors. The final
pass shall be a 'user acceptance' pass, whereby the system shall be deemed to
have been 'accepted' by P. H. Glatfelter if no high priority errors are
generated. (High priority is defined as of sufficient concern to either party
such that the 'go-live' of the system shall be postponed).
Following the go-live, Accenture will continue to provide support to the P. H.
Glatfelter team with the aim of handing over support completely to P. H.
Glatfelter within a period of 3 months. For this to happen it is assumed that
P. H. Glatfelter will identify reasonably sufficient personnel by the start of
the system testing phase to staff the support organization, and that Accenture
will supply reasonably sufficient training to these personnel.
The only basis for rejection of deliverables will be failure of the
deliverables to substantially conform to the acceptance criteria, in accordance
with the acceptance procedures. If Accenture does not receive written notice of
material nonconformance with the specifications within 30 days of delivery to
P.H. Glatfelter for testing, all deliverables will be deemed accepted in full.
8.2 NON-SYSTEMS RELATED WORK
The deliverables are subject to frequent management review and mutual
agreement. Each deliverable can only be rejected for failure to comply with the
scope as outlined in the attached scope documents, and / or reasonable quality.
Procedures to ensure review of the of the Project by P. H. Glatfelter Steering
Committee members have been outlined under Project Timing.
9. PROJECT TEAM STAFFING
9.1 ACCENTURE STAFFING
Barry Jennings, the client partner responsible for the consulting relationship
with P. H. Glatfelter, will have overall responsibility for Accenture service
to P. H. Glatfelter on this Project.
Don Berkemeyer, a senior partner from the Accenture Natural Resources practice,
will perform the role of the Accenture Quality Assurance partner.
John Poisson will be the Accenture program manager. John's program
responsibilities will include managing the integration efforts among the work
modules and between Accenture and P.H. Glatfelter teams.
Nigel Blower will be the engagement partner responsible for the day to day
delivery of Accenture's ERP prototype and ERP implementation.
Alan O'Rear will be responsible for senior executive coaching, advising on
technology issues and direction, and assisting P. H. Glatfelter in the
identification, screening and training of a CIO. Alan will assist P. H.
Glatfelter IT Management in the development of basic operating processes to
support the ERP implementation during development as well as post
implementation.-P. H. Glatfelter may choose to eliminate or replace Alan's
services upon notice in writing (30 day notice) with no further financial
obligation. Such replacement is subject to availability.
Accenture will provide an appropriate mix of personnel to fill the Project team
positions. These team members will collectively be sufficiently proficient in
ERP, process, change management, and technology across each of the Project
areas. The personnel time requirements for the completion of the Project
deliverables as set forth herein is estimated to be as follows:
- ---------------------------------------------------------
Resource Requirements P. H. Glatfelter Accenture
(days) (days)
- ---------------------------------------------------------
Program Management 2,088 1,580
- ---------------------------------------------------------
Alan O'Rear 0 260
- ---------------------------------------------------------
Technology / Infrastructure 2,840 1,040
- ---------------------------------------------------------
Jumpstart 184 480
- ---------------------------------------------------------
ERP Global Design 1,910 990
- ---------------------------------------------------------
ERP Implementation 8,030 6,010
- ---------------------------------------------------------
Organization Design & NPD 1,106 530
- ---------------------------------------------------------
S&OP 230 250
- ---------------------------------------------------------
Customer Direct 550 824
- ---------------------------------------------------------
Total 16,938 11,964
- ---------------------------------------------------------
9.2 P. H. GLATFELTER STAFFING
P. H. Glatfelter participation will include sponsorship through the steering
committee. The steering committee will be composed of the CEO, CFO, COO, CIO,
and CSO. The steering committee will meet on a periodic basis and provide
direction and overall confirmation of Project deliverables.
Robert Newcomer will be the P. H. Glatfelter program manager. He will provide
direction to the Project on a day to day basis. He will be assisted by a P.H.
Glatfelter subject matter expert and approximately 40 full-time P. H.
Glatfelter personnel as described in the Project Resource list (See above). P.
H. Glatfelter will provide staffing for the Project office. Additional P. H.
Glatfelter subject matter experts will be involved part-time to review key
Project deliverables and provide insight into P. H. Glatfelter business events.
10. PROJECT FEES
Based on the current understanding of the scope, Accenture's fees are estimated
to be $25,028,832, plus actual out-of-pocket expenses for items such as travel,
lodging, per diem, PCs, engagement control, and report preparation. We estimate
expenses will be about $3,800,000. In addition, monthly operating and support
expenses for the development of an environment in our Solution Center network
will be approximately $70,000 per month (12 months) for total estimated
expenses of $840,000. As these are estimated amounts, actual fees may differ.
Accenture's compensation will be based on services performed and expenses
incurred. Applicable taxes related to this Arrangement Letter , if any, will be
additional. Invoices will be generated on a monthly basis based on estimated
fees and reconciled the following month.
The parties agree that if the Project and deliverables as identified in this
Arrangement Letter without Change Orders i) are be completed on or before
September 30th, 2002 and ii) within the estimated fee amounts reflected in
this Arrangement Letter, P. H. Glatfelter shall pay Accenture a bonus payment
of $500,000. The parties further agree that if the Project is not completed by
September 30th, 2002 for reasons that are predominantly attributable to
Accenture and as agreed to by the parties, the final monthly payment will be
withheld until the Project is completed. The parties acknowledge that Change
Orders executed throughout the course of the Project may affect the September
30th, 2002 completion date and agree that any such orders to revise the
Project will also include amended completion dates which accurately reflect any
Project revisions due to Change Orders.
The Project will be governed by the terms and conditions set forth in
Attachment A, which is incorporated into this Arrangement Letter by this
reference.
* * * * *
We appreciate very much this opportunity to continue working with P. H.
Glatfelter. We are excited to help you develop this design.
If you have any questions regarding this material, please contact Barry
Jennings at (312) 693-4740 or Nigel Blower at (215) 587-7956.
Very truly yours,
ACCENTURE LLP
By /S/ Barry D. Jennings
---------------------
Barry D. Jennings, Partner
Agreed and Accepted:
P. H. Glatfelter COMPANY
By /s/ George Glatfelter II
------------------------
George Glatfelter II, Chief Executive Officer
Date: January 16, 2001
----------------
ATTACHMENT A
TERMS AND CONDITIONS
1. Payment. Accenture will bill P. H. Glatfelter monthly as noted
above. P. H. Glatfelter will pay Accenture within thirty days after the invoice
is received. Should any invoice remain unpaid for more than thirty days (other
than payments withheld as set forth in Section 10 above), interest shall be
paid by P. H. Glatfelter at a rate of 1.5% per month. Any taxes arising out of
this Arrangement Letter other than those on Accenture's net income and
employment and agent related taxes (excluding Compensatory Taxes) shall be P.
H. Glatfelter's responsibility. In the event of any good faith dispute with
regard to a portion of an invoice, the undisputed portion shall be paid as
provided herein. Upon resolution of the disputed portion, any amounts owed to
Accenture shall be paid with interest at the rate set forth above accruing from
the date such amounts were originally due.
2. Confidential Information. In connection with the Project, each
party will have access to confidential information made available by the other
party; each party shall protect such confidential information in the same
manner as it protects its own confidential information of like kind, but in no
event shall either party exercise less than reasonable care in protecting such
confidential information. Access to the confidential information shall be
restricted to Accenture and P. H. Glatfelter personnel engaged in a use
permitted hereby or unless forced by legal authority, in which event the party
receiving a subpoena or other validly issued administrative or judicial process
requesting confidential information of the other party shall provide prompt
notice to the other of such receipt sufficient to give the other party time to
consent to such disclosure. Unless the disclosing party notifies the other
party that any such subpoena is quashed, the party receiving the subpoena shall
thereafter be entitled to comply with such subpoena or other process to that
extent permitted by law. The confidential information of the discloser may be
used by the receiver only in connection with this Project and may not be copied
or reproduced without the discloser's prior written consent. Nothing in this
Arrangement Letter shall prohibit or limit either party's use of information
(including, but not limited to, ideas, concepts, know-how, techniques, and
methodologies) (i) previously known to it without obligation of confidence,
(ii) independently developed by or for it, (iii) acquired by it from a third
party which is not, to its knowledge, under an obligation of confidence with
respect to such information, or (iv) which is or becomes publicly available
through no breach of this Arrangement Letter. All confidential information made
available hereunder, including copies thereof, shall be returned or destroyed
upon the first to occur of (a) completion of the services or (b) request by the
discloser, unless the receiver is otherwise allowed to retain such confidential
information. Accenture may retain, subject to the terms of this Section, one
copy of P. H. Glatfelter's confidential information required for compliance
with its record keeping or quality assurance requirements.
3. Ownership. Subject to payment in full of the fees related to the
Deliverables specified herein, notwithstanding any withholding payment as set
forth in Section 10 above, and except for those Accenture preexisting
materials, ideas, tools, processes, methodologies, approaches, concepts,
techniques, and any modifications or enhancements thereto (collectively, the
"Accenture Materials") which P. H. Glatfelter acknowledges and agrees are
solely owned by Accenture, the copyright to all original tangible materials
(excluding modifications to the SAP base software which rights will be mutually
agreed to in an amendment to this Arrangement Letter) , including any written
materials, originated and prepared for P. H. Glatfelter by Accenture personnel
pursuant to this Arrangement Letter (the "Deliverables") shall belong
exclusively to P. H. Glatfelter. Accenture retains all other intellectual
property rights in and to the Deliverables. Accenture agrees that any patent it
receives related to its intellectual property rights in the Deliverables will
not diminish the rights granted to P.H. Glatfelter hereunder. P. H. Glatfelter
hereby grants to Accenture, subject to the confidentiality provisions herein, a
nonexclusive, irrevocable, perpetual, fully paid up royalty free, worldwide
right and license to use, sublicense, copy, modify and prepare derivative works
of the Deliverables for use throughout the course of its consulting services.
P. H. Glatfelter acknowledges that Accenture and SAP are currently negotiating
ownership and reuse rights for i) the software deliverables that are originally
developed by joint Accenture and SAP resources pursuant to this Arrangement
Letter, and ii) the software deliverables consisting of modifications and
extensions to the SAP base software (hereinafter referred to as the "Secondary
Deliverables"). Accenture and P. H. Glatfelter currently contemplate that based
on the outcome of the Accenture and SAP negotiations, P. H. Glatfelter shall
have, upon delivery, a license to use, copy, modify and prepare derivative
works of such Secondary Deliverables, and P. H.
Glatfelter agrees to amend this Arrangement Letter upon conclusion of the
Accenture and SAP negotiations to address such rights.
(b) To the extent that Accenture has incorporated any Accenture Materials into
the Deliverables or Secondary Deliverables, P. H. Glatfelter shall have, upon
delivery, an irrevocable, perpetual, nonexclusive, paid-up, world-wide right
and license to use, copy, modify and prepare derivative works of the Accenture
Materials to the extent necessary to use the Deliverables and Secondary
Deliverables in question.
4. Residual Knowledge. Subject to the confidentiality obligations
herein and provided that Accenture does not infringe the rights granted in
Section 3 above, in no event shall Accenture be precluded from developing for
itself, or for others, materials which are competitive with the Deliverables
and Secondary Deliverables, irrespective of their similarity to the
Deliverables and Secondary Deliverables. In addition, both parties shall be
free to use its general knowledge, skills and experience, and any ideas,
concepts, know-how and techniques that are used in the course of the Project.
5. Employees. To allow Accenture to be able to manage its participation in
the Project most effectively, Accenture reserves the right to determine the
personnel to perform the work although Accenture will attempt to honor P. H.
Glatfelter's requests for specific individuals. Accenture and P. H. Glatfelter
agree to establish a quality review process that will address employee
performance deficiencies and the potential replacement on the Project.
6. Limitation of Liability. Each party's liability under this Arrangement
Letter shall not exceed, in the case of Accenture's liability, the fees for
services rendered by Accenture for that segment of work giving rise to the
liability or, in the case of P. H. Glatfelter, the fees payable to Accenture
for that segment of work giving rise to the liability. In no event shall either
party be liable to the other for any indirect, special, incidental,
consequential, exemplary or punitive damages or for any form of damages other
than direct damages. Any action by either party must be brought within two (2)
years after the cause of action arose and was identified within 30 days after
the work causing rise to the action was performed. The parties agree that they
will look only to the assets of the other party in connection with any
liabilities hereunder and in no event shall they have any claim against any
shareholder, partner, or holder of an ownership interest in the other party in
connection with this Arrangement Letter.
7. Indemnification.
(a) Each party shall indemnify, defend and hold harmless the other, its
employees, principals (partners, shareholders or holders of an ownership
interest, as the case may be) and agents, from and against any third party
claims, demands, loss, damage or expense relating to bodily injury or death of
any person or damage to real and/or tangible personal property directly caused
by the negligence or willful misconduct of the indemnifying party, its
personnel or agents in connection with the performance of the Services
hereunder.
(b) P. H. Glatfelter shall defend, indemnify and hold harmless Accenture and
its partners and employees from and against any loss, claim, damage or
liabilities (or actions in respect thereof that may be asserted by any third
party) that may result from any third party claims arising out of or relating
to Accenture's service or any use by P. H. Glatfelter of any Deliverable and
will reimburse Accenture for all reasonable expenses (including counsel fees)
as incurred by Accenture in connection with any such action or claim, except to
the extent any such claim is covered by the indemnity obligation of Accenture
set forth in paragraph (c) below.
(c) If P. H. Glatfelter promptly notifies Accenture in writing of a third party
claim against P. H. Glatfelter that any Deliverable or Secondary Deliverable
developed by Accenture hereunder infringes a copyright, trademark or a trade
secret of any third party, Accenture will defend such claim at its expense
(including P.H. Glatfelter legal counsel expenses and fees) and will pay any
costs or damages that may be finally awarded against P. H. Glatfelter.
Accenture will not indemnify P. H. Glatfelter, however, if the claim of
infringement is caused by (1) P. H. Glatfelter's misuse or modification of the
Deliverable or the Secondary Deliverable; (2) P. H. Glatfelter's failure to use
corrections or enhancements made available by Accenture; (3) P. H. Glatfelter's
use of the Deliverable or the Secondary Deliverable in combination with any
product or information not owned or developed by Accenture, other than products
or information developed by SAP resources; (4) P. H. Glatfelter's distribution,
marketing or use for the benefit of third parties of the Deliverable or the
Secondary Deliverable or (5) information, direction, specification or materials
provided by P. H. Glatfelter or any third party, other than SAP resources. If
any Deliverable is or Secondary Deliverables, or in Accenture's opinion is
likely to be, held to be infringing, Accenture shall at its
expense and option either (i) procure the right for P. H. Glatfelter to
continue using it, (ii) replace it with a non-infringing equivalent, (iii)
modify it to make it non-infringing or (iv) direct the return of the
Deliverable or the Secondary Deliverable and refund to P. H. Glatfelter the
fees paid for such Deliverable or Secondary Deliverable less a reasonable
amount for P. H. Glatfelter's use of the Deliverable or Secondary Deliverable
up to the time of return. The foregoing remedies constitute P. H. Glatfelter's
sole and exclusive remedies and Accenture's entire liability with respect to
infringement.
8. Use of Name. Neither party shall use the other party's name
outside its organization in connection with its use of the Deliverables or
otherwise without the express written consent, which may be withheld by either
party in its sole discretion.
9. Force Majeure. Neither party shall be liable for any delays or
failures in performance (other than payment obligations hereunder) due to
circumstances beyond its reasonable control.
10. Independent Contractor. In connection with this Arrangement
Letter, each party is an independent contractor and as such will not have any
authority to bind or commit the other. Nothing herein shall be deemed or
construed to create a joint venture, partnership, fiduciary or agency
relationship between the parties for any purpose.
11. Warranty. Accenture warrants that (i) its services will be
performed in a workmanlike manner and (ii) the delivered items developed by
Accenture for P. H. Glatfelter under this Arrangement Letter shall
substantially conform to the agreed to specifications. Accenture shall, at no
cost to P. H. Glatfelter, reperform any work not in compliance with this
warranty brought to its attention within ninety (90) days after that work is
performed. P. H. Glatfelter's exclusive remedy for a breach of this warranty
shall be for Accenture, upon receipt of written notice, to use commercially
reasonable efforts to cure the breach at its expense, and failing that, the
return of fees paid to Accenture for the work related to the breach.
THE PRECEDING IS ACCENTURE'S ONLY WARRANTY CONCERNING THE SERVICES AND ANY WORK
PRODUCT, AND IS MADE EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES AND
REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF
FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR OTHERWISE.
12. Disputes. The parties agree that in the event of a dispute
under this Arrangement Letter, they will work together in good faith first, to
resolve the matter internally by escalating it to higher levels of management
and, then if necessary, to use a mutually agreed alternative dispute resolution
technique prior to resorting to litigation. This provision shall not apply to
disputes involving confidentiality or infringement of intellectual property
rights (in which case either party shall be free to seek available remedies in
any forum).
13. Non-Solicitation of Employees. Each party agrees not to solicit, offer
work to, employ or contract with any of the other party's personnel during the
term of that individual's involvement on the Project and for a period of twelve
(12) months following that individual's participation on the Project without
first obtaining the written consent of the other party.
14. Termination. This Arrangement Letter may be terminated by either party
upon written notice if the other party breaches any material term or condition
herein and such breach remains uncorrected for thirty (30) days following
written notice from the other party specifying the breach. P. H. Glatfelter
may at any time and without cause terminate this Arrangement Letter by giving
Accenture (30) days' prior written notice of termination. Upon such
termination, P. H. Glatfelter shall pay Accenture for all services rendered and
reasonable, documented expenses incurred by Accenture prior to the date of
termination, and any demobilization or other costs resulting from such early
termination. In the event of termination by P. H. Glatfelter without cause or
termination by Accenture due to a breach by P. H. Glatfelter, P. H. Glatfelter
shall also pay Accenture for those nonrefundable costs committed to by
Accenture, and other reasonable and documented demobilization costs incurred by
Accenture as a result of such early termination with respect to the Project.
15. Scope Changes. Changes to the scope of the services shall be made only in
a writing executed by authorized representatives of both parties. Accenture
shall have no obligation to commence work and P. H.
Glatfelter will have no liability to pay in connection with any future scope
change until the fee and/or schedule impact of the change is agreed upon by the
parties in writing.
16. This Arrangement Letter and attachments constitute the entire agreement
between the parties with respect to the subject matter hereof and thereof and
supersede all other communications, whether written or oral. This Arrangement
Letter may be modified or amended only by a writing signed by both parties. P.
H. Glatfelter acknowledges that it is entering into this Arrangement Letter
solely on the basis of the agreements and representations contained herein, and
for its own purposes and not for the benefit of any third party.
17. This Arrangement Letter shall be governed by and construed in accordance
with the laws of Illinois, without giving effect to conflict of law rules. The
parties agree that any legal proceedings in connection with this Arrangement
Letter shall be filed in the courts in the City of New York.
18. Accenture shall have no responsibility, obligation or liability to a
licensee of P. H. Glatfelter with respect to P. H. Glatfelter's licensed
products.
19. This Arrangement Letter shall not be assignable by either party without
the prior written consent of the other.
20. Any notice or other communication given pursuant to this Arrangement
Letter shall be in writing and shall be effective either when delivered
personally to the party for whom intended, or five (5) days following deposit
of the same into the United States mail (certified mail, return receipt
requested, or first class postage prepaid), facsimile (with confirmation of
delivery) or overnight delivery services ( with confirmation of delivery),
addressed to such party at the address set forth on the initial page of this
Arrangement Letter. Either party may designate a different address by notice to
the other given in accordance herewith.